dYdX Takes a Stand Against MEV Ahead of Appchain Migration

• dYdX, the leading decentralized perpetuals exchange, is taking a stand against Maximal Extractable Value (MEV) ahead of its migration to a Cosmos-based appchain.
• The dYdX Foundation published a list of preferred practices for dYdX Chain validators and stakers.
• The manifesto warns that validators engaging in malicious MEV will face punishment.
• The foundation added that delegates could also face repercussions should they support validators engaging in extractive MEV.

dYdX Takes a Stand Against MEV

On August 21, the dYdX Foundation published a list of preferred practices for dYdX Chain validators and stakers, including ensuring a “fair and honest trading experience” for users by shunning MEV activities that could harm or disadvantage ecosystem participants. 

The manifesto warns that validators engaging in malicious MEV will face punishment, along with encouraging social measures to disincentivize MEV extraction altogether. The foundation added that delegates could also face repercussions should they support validators engaging in extractive MEV.

What is MEV?

MEV describes advanced arbitrage techniques used by validators to extract profits by reordering or sandwiching transactions executed by ordinary Web3 users. Flashbots, an MEV research team, estimates Ethereum users lost $450 million to MEV since The Merge took place last September, and $640 million in the two years preceding.

dYdX Chain Migration

Additionally, dYdX is making progress in its transition away from the Ethereum ecosystem with the launch of the second public testnet for dYdX Chain and various backend upgrades.  

The warning comes as dYdX is gearing up to leave the Ethereum ecosystem in favor of a Cosmos-based dedicated appchain for its forthcoming v4 iteration. The team launched the second public testnet for dYdX Chain on August 10, introducing more than 30 markets on the platform, distributing testnet tokens to reward users, and making several back-end upgrades. The first testnet went live on August 7, following a month of operation.

In conclusion, the decentralized perpetuals exchange is intensifying its efforts to combat Maximal Extractable Value (MEV) ahead of its migration to a Cosmos-based appchain. 

By taking a stand against MEV, dYdX aims to protect ecosystem participants and mitigate financial losses.